Self-Directed Investors Remain a Lucrative Target Group for Wealth Managers

by Sameer Joshi or 31-Mar-2016

Publisher's latest report Self-Directed Investors: Implications for Wealth Managers draws on our 2015 Global Wealth Managers Survey to analyze the independent HNW investors’ landscape across the globe. It sizes the market for self-directed investments and examines the key drivers behind wealthy individuals’ decision to build their portfolios without professional advice. The competitive landscape and product environment are also analyzed.


Although advisory and discretionary asset management services are more profitable for wealth managers, they cannot afford to ignore the needs of clients who self-direct. Globally over a quarter of high net worth (HNW) wealth is invested independently of wealth managers’ mandates. Understanding the factors driving the demand for execution-only platforms will help private banks and wealth management firms engage effectively with clients who wish to retain exclusive control over a portion of their wealth.


Key Findings:


  • Globally, execution-only mandates constitute 19.1% of total HNW assets held with wealth managers. Although clients in developing economies tend to prefer unadvised services, the US represents the biggest market opportunity in terms of self-invested assets.
  • HNW clients under 35 years old and first-generation entrepreneurs are most likely to self-direct their investments.
  • Price-sensitivity encourages HNW investors to look for alternatives to the services of wealth managers in mature economies, but in developing markets a pure preference to run simple portfolios independently is the key driver.
  • Advances in digital technology are contributing to the growing interest in DIY investments, particularly in Asia Pacific.
  • Traditional brokerage business models are being challenged by the growing number of platforms offering automated investment solutions (robo-advisors).
  • The increasing popularity of exchange-traded funds (ETFs) and peer-to-peer (P2P) lending platforms has started to affect the business of wealth managers.


Specifically, the report:


  • Estimates the value of HNW and mass affluent assets invested outside discretionary and advisory mandates
  • Analyzes the demographics of DIY investors
  • Compares drivers for self-directed investments between developed and emerged economies
  • Examines client targeting strategies of brokerages and robo-advisors
  • Identifies what investment products are preferred by self-directed HNW clients and how wealth managers can use them to expand their offerings